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s will be back on the job. in today's cover story, taking stock of sandy. how much will the storm cost? why traders will have a keen eye on the oil market today, while motorists will watch prices at the pump. and why warren buffett could be heading to a neighborhood near you. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's wednesday october 31st - halloween 2012. in today's first look: it's back to business for traders from wall street to
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lasalle street. all major exchanges are open for trading after a 2-day shutdown caused by superstorm sandy. it was critical for the markets to open today. it's the end of the month, which means money managers will be pricing portfolios. a conference call is scheduled today for european leaders to talk about the progress greece is making on austeritiy measures to get its much needed bailout. may the force be with disney. disney is buying lucasfilm for $4 billion. george lucas is the creator of "star wars." tres knippa of kanai capital management joins us this morning. good morning. at last, a trading day for you there. tres, i wonder, what's the trade that you're really aching to get in. what do you think will be your first trade today? > > in the last couple of days, as you analyzed what happened and as the storm hit, there
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were kind of some absolutes in my mind about what should have happened. number one, as you close refineries along the eastern seaboard, you should have seen spikes in unleaded gasoline prices. but by the same token, if those refineries are closed, that means that the end users don't need crude. they're not going to buy crude. so that should have been very bearish, the crude oil market. the crude oil market didn't break nearly as much as i expected it to. and the other thing that i noticed is- keep in mind i trade futures. in futures, futures have contract months. the lead month is december, and you trade every single month. so presumably, you would think that the front months of crude would have weakened toward the back months of crude, because, if the end users, i.e. the refineries along the eastern seaboard, if they don't want the crude right now, then they'll pay up and store it and use it later. that didn't happen. you actually saw the front months of crude actually showing some reasonable support to the back months. i totally didn't expect that. so for me, i am not going to sell into this break, and i actually would rather be a buyer of break in the crude rather than a seller of rallies.
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> > what else surprised you in this market? > > the other big surprise to me was the cattle. if you make some assumptions and say, ok, if all those people up in the northeast, they're locked up at home, they're not going to the grocery store, they're certainly not going out to steakhouses and buying beef, things like that, they're certainly not cooking out by any stretch of the imagination; so in theory, this should have been very bearish for cattle prices, and it wasn't. yesterday you opened lower, came back, and then followed through and rallied. when you see something that is rallying in the face of what i think is bad news, you have to respect it, and you have to go with it. > > thank you tres. i hope it all works out for you today. the new york stock exchange vows it will be open and trading wednesday after two sandbag- filled days that washed away rail lines and boardwalks in new jersey and left millions along the east coast without electricity. now considered a cyclone, sandy destroyed homes first by wind, flood and then fire - 80 to 100 homes in the beachfront neighborhood of queens new york aptly-named
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breezy point. firefighters say the water was chest deep - they made rescues with a boat, including 25 people trapped in one apartment about to catch fire from the house next door. "our first responders have been doing a heroic job protecting our city and saving lives. they're still conducting search and rescue missions, and we owe them an incredible debt of gratitude." on long island, huge trees fought to stand their saturated ground but could not compete with hurricane-force winds. "i said kiddingly to the president that 'we have a hundred-year storm every two years, now.' anyone who says there's not a dramatic change in weather patterns, i think, is denying reality." debris piled on top of cars as the storm's cost piled higher as well. the human cost continues to climb: more than three dozen killed, many by falling trees, and more than 8.2 million people without power. rising water threatened to flood pumps used to cool fuel rods at a nuclear power plant in new
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jersey. fluctuations in the power grid shut down more plants. "our best assessment is that the plant responded and that there was no need for emergency operations this time." more than 15,000 flights were cancelled by airlines. forecasting firm ihs global insight estimates sandy will cost $20 billion in property damage - $10 to $30 billion more in lost business. "america's with you and we will help you get back on your feet." 800 miles away, the chicago board options exchange was quiet, but even lake michigan felt sandy's effects, with waves more than 20 feet high. wednesday may be a very busy day for traders, who need prices to value their portfolios at the end of the month. bond markets are expected to reopen and som expect heavy selling as investors whose fiscal years end in october are looking to
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get tax benefits by getting rid of losing stocks. insurance companies are preparing for payouts to customers who were affected by the storm. early estimates suggest insurance companies will spend $5 to $10 billion covering costs. bloomberg news reports aig alone could pay upwards of $4 billion. to get fast action from insurance companies, bloomberg suggests: take inventory of what you lost, read terms of your coverage, and check for a hurricane deductible. if you don't have flood insurance, you may be eligible for federal disaster assistance, grants or loans. president obama is already making government assistance available in new york city and parts of new jersey. an executive-level shake-up at apple: two senior vice presidents, one in charge of apple's retail stores and the other tied to the google maps debacle, are leaving the company. john browett's departure is immediate. he cut staffing hours at apple's retail stores, a traditional retail move to improve profits but which, at apple, undercut what some describe as ambassadors of
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apple's brand who guide customers to in-person technical support. scott forstall's software division replaced google maps with apple's own maping application that suffered heavy criticism from iphone five customers. apple admits the retail cutbacks were a mistake and has apologized for weaknesses in its mapping application. boeing is delaying the delivery united continental. the airline picked up its first 787 in september. the timetable for the next delivery is unclear. meanwhile, boeing reportedly is closing a deal to sell 35 of its redesigned 737 aircraft to russia's aviation capital services. that deal is said to be worth $3.5 billion. billionaire warren buffett is taking his own advice. after mentioning he'd make an
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investment by purchasing a "couple hundred thousand single-family homes," buffett's berkshire-hathaway seems to be betting on residential real estate sales. buffett's company is acquiring two real estate franchises, one from prudential and another from real living. companies as berkshire-hathaway home services. recent data from several arenas is suggesting that the housing recovery may be on a sustainable upward swing. the latest example comes from standard and poor's case schiller index, which shows home prices rose in most u.s. cities in august by 2% when compared to a year ago. additionally, the report notes that many of the hardest hit markets are showing gains. add to that a federal index of housing prices that also cites annual price increases during the past two years. profits continue to climb at ford. the car company brought in $2.3 billion in pre-tax profits,
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making up for the $468 million loss in europe. ford expects its european losses could exceed $3 billion during the next 2 years. this is the third quarter in a row ford has earned more than $2 billion. what works for pizzas may not work not for ipads. the same-day delivery service that walmart, amazon and ebay all recently launched is not going as smoothly as expected. customers in certain test cities can choose to spend an additional $10-$15 to receive their purchases that day. but the convenience of rapid home- deliveries has turned out to be a logistical and costly nightmare for the online retailers. problems range from high overhead to unreliable drivers. crocs, the creator of that ubiquitous rubber footwear with the holes in it, is scaling back discounts of its original shoe. during the holiday season, three new collections will be promoted in the u.s. & europe:
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fur-lined, rain boots, and a retro clog. the colorado-based shoe company posted lower 3rd quarter earnings on net income of $45 million. flat sales in europe offset the continued popularity for the product line in america. one winner in the wake of hurricane sandy appears to be netflix. the company "reeled" in a 20% increase in video streaming this past monday compared to a week ago, while viewership doubled in major cities hit by sandy, including new york, boston and philadelphia. with workplaces and schools closed across the eastern seaboard this week, it seems lots of people coped by hunkering down and watching movies. there's no way to sugar-coat it: sandy will likely scare off business for east coast merchants who rely on halloween spending on the holiday itself, and the cost of halloween candy is up. according to the american sugar alliance, consumers are paying 7% more for chocolate and hard candy than they were just two years ago, yet the cost of the sugar in those products has dropped by
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35% during the same period. and sugar may continue trending downward. "we have a surplus and it's only going to increase." one relatively bright spot for confectioners, halloween on a wednesday means most folks who were going to buy candy for trick-or-treaters likely did so during the weekend. still to come,what you can expect at the gas pump post- hurricane sandy and pre- election. plus, stocks that could pop or drop as the market gets back in action today.
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superstorm sandy is disrupting gas supplies on the east coast, but that will thankfully spare california, which has seen its own disruptions of late. gas has been more thn $4 a gallon for months in the golden state after disruptions at several refineries. those in sacramento saw prices dip below $4 per gallon just this week, but the state's average is still at $4.13 per gallon. nationally, gas prices are down more than a dime since last week, with an average cost of $3.53 per gallon. will prices continue to drop or head higher from here? joining us now on set, beth mosher of
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aaa. good morning to you. good to have you back on the show. > > good morning. thank you. > > what are you anticipating in the wake of superstorm sandy? > > we think that we've already seen some production stop. there's about six refineries in the northeast region. two of them have shut down production. demand has certainly dropped off. but we think overall across the country we are going to continue to see these prices drop. > > we didn't see an immediate spike in gasoline prices. why was that? > > the northeast is really the consumer of gasoline as opposed to the producer, and some other hurricanes like katrina and irene before, they've hit an area that has been a big producer of oil, whereas really, in the northeast, they are the consumers of all of that gasoline, and so demand has dropped, but the supply hasn't really dropped as much. > > so the demand is dropping, especially as people are stuck
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home and not going to offices for instance. > > right. flights are canceled, and people are not driving around as you said, so the demand there has dropped, and that, interestingly enough, has pushed some prices in the southeast region down even further because that oil that usually would have gone to the northeast has dropped off a little bit. > > so much of this boils down to what's going on with the refineries. so what do you anticipate there? you know, we think that this is going to be just a temporary shutdown in the northeast region, and that, as i said earlier, we are going to continue to see prices continue to drop, and demand will come back up after the hurricane is through. > > quick predictions now: where do you see prices, or where do you see prices ahead of the election or on election day? > > we tend not to predict gas prices, because there is always something like a hurricane that comes through and throws things off. it's very difficult to predict. but we do think prices right now across the country are sitting on an average of $3.53. we think those prices are going to continue to drop as we head into the election and even through the end of the year. > > good to have you on the show this morning. that's beth mosher of aaa. > > thank you. still ahead, trader scott bauer on what he's paying attention to post-sandy.
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airlines, utilities, energy and insurance stocks will be in focus for traders today. for more on storm-related sectors, scott bauer of trading advantage joins us from cme group this morning. good morning scott. > > hi. how are you angie? > > i'm doing well. what about the retailers? will those be affected as well? > > you know, the stocks i'm looking at, like home depot and loews, these stocks have been on a pretty nice run, trading at or near their high, their
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resistance levels over the last 6 to 9 months. these stocks have the potential to carry the retail market and to just take off from here. with all of the recovery ahead, all of the spending that's going to be done in this arena, those are two stocks to really key in on. > > speaking of taking off, the airlines, which tend to move with the economy. what happens though when disaster strikes? > > you know, the airlines are pretty well prepared. some of the percentages i heard is that when there are cancellations to this magnitude, the rebooking rates they like to see in the 80% rate. and i heard that the rebooking rates for all of these missed flights are going to be somewhere in the 75% to 80% area. i wouldn't doubt if we see airlines just sell off a touch. i don't think we're going to see anything really massive. we will probably see some hurt to the bottom line in the
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fourth quarter, but you know what, that might be offset by lower energy prices, lower oil prices, which they're going to have to pay going forward. > > what do you think about the utility stocks? are those likely to move, especially on the east coast? > > you know, they probably will, but the biggie that everyone's going to really watch in the commodities space is the oil market. it's kind of the chicken and the egg here. demand is going to be down, but, from everything that's been reported out there, the supply is down, but demand is going to be way, way down, because traffic is curtailed and all sorts of transportation is curtailed. so really what i'm hearing from traders and from what i'm seeing in the media here is, oil is probably going to make another leg down, unless we see these refineries being offline for three, four, five weeks. if they're up and running again within the next week or two, $80 is the next stop. > > what about insurance stocks? which one of those is likely to take a hit? i'm hearing some of the balance sheets for those companies are actually quite strong. > > i agree with you angie. some of the ones i cover - allstate, chubb, hartford and travelers - the balance sheets
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on these guys are actually phenomenally, phenomenally strong. there is definitely some potential downside here, but i wouldn't really see anything probably more than a 5% pullback. if these stocks really are volatile, and get hit later today, then you know what i would do? i would be a buyer. i would watch for option volatility to be enormous. it might be a great time to buy stock, maybe sell some upside calls. > > good to have you on the show this morning. that's scott bauer of trading advantage. don't go anywhere. coming up next, which way will the market move? that's next in chart talk.
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traders are poised to get back on the job today. one of those traders is dan deming of stutland equities. good morning to you, dan.
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> > good morning angie. > > what's it been like being off for a couple of trading days here? > > it's kind of a very bizarre extended weekend. we haven't encountered this really going back to, i guess, 9/11, but prior to that it's been probably 20-some years for the market to be closed due to weather. it's kind of a strange situation as we roll into the unemployment number. we have a shortened week now, and a lot of these numbers have been delayed. we did see though over the course of the last few days, the one thing that we've been keeping a very close eye on is the s&p 500 futures have been trading periodically overnight and into the morning until 8:15 in the morning. now, they were down significantly over the first couple of days, but then they evidently rallied yesterday into the close, and after the case-shiller number came out they were actually up. so that would lead you to believe right now that if the market can continue to hold these levels, that you'll see vol expectations probably under pressure initially if the market, like i said, can stay above 1400, which is an area we're watching very closely. > > i'm imagining that trading could turn quite frenetic today
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considering that we have the jobs number out at the end of the week especially. > > and then you roll into the election. so, you've got a few things out there that certainly will play into the volatility expectations. the question is how much is priced in? we will see how that news unfolds. but we do have some uncertainties coming into the next three days of trading that could impact the volatility expectations. but like i said, right now, as you look at the futures, the futures at least showing us that the market has been able to kind of weather this storm. > > good to have you on the show, and i hope you have a great trading day. > > thanks angie. that's all the time we have for today. coming up tomorrow, fallout from hurricane sandy at the box office, and why the third time was the charm for argo. from all of us first business, happy halloween!
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. as the death toll rises people are still trapped by floodwaters on the east coast. they are trying to keep people safe from predators, it's all ahead on the bay area
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news. this is channel 2 morning news. thank you for joining us, it is wednesday, october 31st. >> yes, steve, what is it looking like. >> steve, it is drizzling. >> it is pushing in a lot of low clouds and up done think it will be an issue for the giants parade. some rain to the north bay but not until later, here is sal. good morning, traffic is moving along well, but as you mentioned, it will be wet out there and drizzling parts of the bay bridge take it easy, if you are trying to get into the city it's going to be crowded on bart. westbound is

First Business
FOX October 31, 2012 4:00am-4:30am PDT

News/Business. Angie Miles. (2012) New. (CC) (Stereo)

TOPIC FREQUENCY Us 6, Angie 4, Europe 3, Scott Bauer 3, Eastern Seaboard 2, U.s. 2, Boeing 2, Superstorm Sandy 2, Beth Mosher 2, Warren Buffett 2, Steve 2, America 2, Russia 1, Greece 1, New York City 1, New York 1, Allstate 1, Loews 1, Lucasfilm 1, Obama 1
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